Question

Are closing costs tax deductible? I recently refinanced and I would like to deduct closing costs for a mortgage refinance but I am not certain this is allowed by the IRS.

Answer

You can only deduct closing costs for a mortgage refinance if the costs are considered mortgage interest or real estate taxes. You closing costs are not tax deductible if they are fees for services, like title insurance and appraisals.

You can deduct these items considered mortgage interest:

  • Mortgage insurance premiums — for contracts issued from 2015 to 2020 but paid in the tax year
  • Points — since they’re considered prepaid interest. You must usually allocate points over the life of the loan.

You can’t deduct your mortgage insurance premiums if your adjusted gross income (AGI) is more than:

  • $109,000
  • $54,500 if you’re married filing separately

 

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